Court of Appeals will review frack-ban lawsuits (updated)

The state’s top court will review appeals in two lawsuits fighting the ability of local governments to ban hydrofracking within their borders. The suits pit the Cooperstown Holstein Corp. against the Town of Middlefield in Otsego County and Norse Energy Corp. against the Town of Dryden in Tompkins County.

The plaintiffs’ motions for leave to appeal were announced Thursday morning.

In May, the state Appellate Division upheld lower court decisions that found nothing in the state’s Oil, Gas and Solution Mining Law that removed the supremacy of localities to institute bans such as those voted into force by the two towns.

When that decision came down, legal observers noted that the odds were stacked against the Court of Appeals’ deciding to review the case because the four-judge panel’s ruling was both unanimous and did not represent an overturning of a lower court’s action. Plaintiffs’ attorneys insisted that the cases involved significant issues worthy of the top court’s attentions.

Albany attorney Thomas West, who represented Norse in the Dryden appeal, called the Appellate Division’s decision “another nail in the coffin for drilling in New York.” Energy companies aren’t going to plunge resources into leases for drilling rights on land that can be swept out from under them by “a 3-2 town board vote,” he added.

The decision adds another avenue in the statewide battle over the controversial natural gas drilling technique, one that will run parallel to the current regulatory course.

That process has taken on the structure of a Russian nesting doll, or a series of dominoes that appear to be glued to the table: Gov. Andrew Cuomo is awaiting the completion of the Department of Environmental Conservation’s massive regulatory blueprint, which is awaiting the state Health Department’s review of the health-impacts chapter of DEC’s work, which is apparently still awaiting progress reports from researchers examining the process in states where it’s legal — and if those progress reports are currently held up by yet another thing (like lunch), Health Commissioner Nirav Shah isn’t saying.

Norse, which holds drilling leases on roughly 130,000 acres in New York State, declared bankruptcy in December; last month, a court approved its plan to move ahead with an asset sale.

Cooperstown Holstein is a dairy operation whose owners have leased their 400 acres for natural gas development despite the Middlefield ban.

Here’s the reaction to the Court of Appeals’ decision from the pro-fracking Joint Landowners Coalition:

The Joint Landowners Coalition of New York and our 77,000 landowners are ecstatic over the New York State Court of Appeals’ decision to review the lower court rulings in the Middlefield and Dryden cases. These decisions have wreaked havoc in our towns. Local municipalities are simply not equipped to decide issues affecting our state and national interests in producing clean domestic energy. New York cannot have a “not in my back yard approach” to energy development.”

Scott Kurkoski, attorney for Jennifer Huntington in the Middlefield case said: “The future of New York’s energy policies and the rights of New York landowners now rests in the hands of the Justices of New York’s highest court. We are hopeful that the Court of Appeals will protect the rights of landowners and allow New York to realize the environmental and economic benefits of natural gas while allowing our nation to maintain its course towards energy independence.

Update: Here’s more reaction, from the anti-fracking group EarthJustice:

A town in New York is continuing its epic court battle with the oil and gas industry to keep a local fracking ban in effect as the New York State Court of Appeals today announced it would take up the appeal of Norse Energy Corp. USA. Residents of Dryden are gearing up for the next round of their fight to protect their way of life, joining hundreds of communities across the country that have fought the oil and gas industry.

“We are confident that the Court of Appeals will affirm, as two other courts have before it, that our town has the right, enshrined in our state Constitution and upheld by the courts, to decide how land is used within our town borders,” said Dryden Town Supervisor Mary Ann Sumner. “Still, the oil and gas industry is dissatisfied and stubbornly insists on dragging out this court case. Clearly, they’re not used to not getting their way.”

On May 2, a state intermediate appeals court ruled in favor of the Towns of Dryden and Middlefield, affirming lower court decisions upholding the Towns’ right to ban oil and gas development activities — including the controversial technique of fracking — within town limits. On May 31, oil and gas industry lawyers filed papers asking the Court of Appeals to review the decision. There will be no further opportunities to appeal the Court’s decision after it rules on the case.

“Every court that has had the opportunity to address fracking in Dryden has upheld the local power to limit the use of land for oil and gas development. But the industry is hoping that the Court of Appeals will reverse those decisions” said Earthjustice Managing Attorney Deborah Goldberg. “Our client, the Town of Dryden, is fighting the unwelcome industrialization of a quiet, rural community. And we’ll fight at its side until this matter is resolved once and for all.”

The Dryden case has taken on special significance. More than 20,000 people from across the country and globe sent messages to Sumner and her colleagues on the Town Board, expressing support for Dryden in its legal fight.

Dryden’s story began in 2009, after residents pressured by oil and gas company representatives to lease their land for gas development learned more about fracking, the technique companies planned to use to extract the gas. During fracking, short for hydraulic fracturing, companies inject millions of gallons of chemically treated water into the ground to break up rock deposits and force out the gas. Residents organized and educated their neighbors for more than two years under the banner of the Dryden Resource Awareness Coalition (DRAC), ultimately convincing the Town Board to amend its zoning ordinance in August 2011 to clarify that oil and gas development activities, including fracking, were prohibited.

More than 170 municipalities in New York have passed bans or moratoriums on fracking, prompting a nationwide groundswell — some 350 communities across the country have voted to take official action — from non-binding resolutions to improved protections to outright bans.

Just six weeks after Dryden prohibited fracking in 2011, Anschutz Exploration Corp. (a privately held company owned by a Forbes-ranked billionaire) sued Dryden over the zoning provision, claiming that localities did not have the right to ban industrial activity. Dryden successfully argued that its right to make local land use decisions, enshrined in the home rule provision of the New York State Constitution, applies to oil and gas development. In February 2012, a state trial court judge agreed.

Following that ruling, Anschutz pulled out, and Norse Energy Corp. USA, a U.S. subsidiary of a foreign-owned oil and gas company, filed an appeal. Shortly after filing its appeal, the company entered bankruptcy proceedings. If the Court of Appeals decides to review the case, it’s not clear whether Norse will continue with the lawsuit or if yet another oil and gas company will step in.

From the state Petroleum Council:

New York State Petroleum Council Executive Director Karen Moreau welcomed the decision by New York’s Court of Appeals to hear from local landowners and the oil and natural gas industry on hydraulic fracturing bans in Middlefield and Dryden that stand in the way of needed economic investment.

“Natural gas development will give a huge shot in the arm to many economically depressed areas of Upstate New York. We are pleased that New York’s highest court has agreed to hear these cases, and it could be a significant step toward ending a state-wide moratorium that is stifling job creation and investment.

“Hydraulic fracturing is a safe and time-tested engineering technology that is creating economic opportunities and jobs in areas of the country that need it the most.”

The NYSPC and API represent all segments of America’s technology-driven oil and natural gas industry. Its more than 550 members provide most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and 8 percent of the U.S. economy, delivers $85 million a day in revenue to our government, and, since 2000, has invested over $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.

And the state Independent Oil & Gas Association:

“We’re pleased to know the merits of the issue will receive a dispassionate examination by the Court of Appeals.

In our view, local bans on oil and gas exploration violate New York’s Environmental Conservation Law and create patchwork public policy and a level of regulatory uncertainty that discourages business development. State laws were enacted with the specific purpose of overseeing natural gas extraction, in that local municipal leaders lack the resources, scientific background and regulatory expertise to do so.

Further, state laws wisely acknowledge the need for local communities to benefit from these activities, and localities are authorized to impose special taxes on natural gas production, which for decades have helped fund towns, schools and fire districts in many New York communities.”